Tax News

CCH (cch.taxgroup.com) reports:

  Both the Maine Senate and House of Representatives have passed a bill that would replace the current personal income tax brackets, personal exemptions, and itemized deductions with a 6.5% flat tax on all taxable income. In addition, the bill would:

  -- create a new "household credit" for low- and middle-income individuals (the credit amount would be adjusted annually for inflation);

  -- add a tax credit for charitable contributions exceeding $250,000;

  -- establish a tax credit for persons who are 65 years of age or older;

  -- eliminate the low-income tax credit;

  -- abolish the alternative minimum tax on individuals;

  -- repeal the 15% tax on lump-sum retirement plan distributions and early distributions from qualified retirement plans;

  -- replace withholding exemptions with a requirement that the household credit be taken into account when determining personal income tax withholding rates; and

  -- require the State Tax Assessor to report to the Joint Standing Committee on Taxation by November 1, 2011, regarding the impact of the changes in the tax laws contained in the bill.

  The proposed changes would apply to tax years beginning on or after January 1, 2010. At press time, Gov. John Baldacci has not indicated whether or not he will sign the bill.

  Provisions in H.P. 750 pertaining to sales and use taxes and property taxes are reported separately. (TAXDAY, 2009/06/08, S.14)

  Subscribers can view the original bill and amendments to the original bill that affect personal income tax provisions.

L.D. 1088 (H.P. 750), as passed by the Maine House of Representatives on June 4, 2009, and passed by the Maine Senate on June 5, 2009